Page 34 - PROJECT KHOKHA 2

THE PROOF-OF-CONCEPT
Delivery-versus-payment is more complex for non- fungible tokens
In the primary market, the purchase of a debenture in the auction process triggers a dedicated DvP contract to execute an atomic swap within the Khokha Hub debenture module as part of the issuance process. For the atomic swap to complete the transaction, it had to verify the NFT’s data against ISIN data, including verifying the authenticity,
value and any possible actions linked to the NFT. Alternatively, in the secondary market, the FDM Token was created as a synthetic instrument representing the debenture token’s value at maturity to price the FDM Tokens and make them fungible, increasing liquidity in the market. Markets were set up for each maturity week, with trade setup being done utilising a
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decentralised exchange (DEX) order book, with
bids and orders being made on a peer-to peer (P2P) basis. The DvP contract for the fungible instrument was less complex since it did not have to complete all the same checks required by the DvP contract for the debenture tokens.
Factors affecting the complexity of porting a token
Porting a token may, depending on the nature of the token, require verifying three factors, namely the authenticity, value and potential actions linked to a token. With the wCBDC, particularly as a fungible token, its authenticity is linked to the SARB as its issuer, which attestation is then linked to the wCBDC Zone
on which the wCBDC tokens are issued. With NFTs, it is not only the issuer that is important, but also verifying the authenticity of individual tokens, which is why the verification of the
ISIN and other details become important. The verification of the value of the wCBDC is linked to the central bank as its issuer, whereas for the wToken, as a stablecoin, verification requires verification of the reserve assets to which its value is linked. In other words, for the wToken,
it means verification that the value on the wToken arrangement is fully backed by central bank money earmarked in settlement accounts. Security tokens, such as the debenture token, may have actions linked to it, such as settlement of obligations like the payment of principal and interest at maturity. To increase the utility of a ported security token on a non-native network, it is important that the underlying actions linked to that security be linked to the ported-security and available to the non-native network.
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An exchange enabling the direct trade of DLT-based tokens on a peer-to-peer basis without the need of an intermediary.
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PROJECT KHOKHA 2